Campers who secured a spot on the idyllic, seven-mile stretch of coastline that cuts from Kent into East Sussex were counting themselves lucky this weekend. After all, Camber Sands holiday park, within earshot of the waves, is spilling over with families desperate to find space for their tents, canvas chairs, gazebos, awnings, mattresses, camping stoves and more.

Others have been stopped at the gate. The warden, Eddie Stringer, has been turning cars away for weeks now, sending them 10 miles or more in search of another site. 'On average, it's about seven or eight groups a day who can't get in,' he says.

The 100 or so people who phoned last week have also been disappointed. 'We could have filled the touring park nine times over,' says Fiona Scott, the site's sales manager. 'It wasn't like this last year. If someone calls up and says they have a four-man tent, you have no idea how big it's going to be these days.'

The pressure for space has caused families to edge their tents closer and closer together, ignoring the advice of the Camping and Caravan Club that they should be at least six metres apart.

'We haven't been able to accommodate people on spec this year,' says Scott. 'People turn up on motorbikes from the ferry looking for a night to stop over and we just don't have the room.' Unable to expand, Scott and Stringer are hoping to allow families to squeeze more tents around the chalets next year.

The seven sites in the area are all fully booked, as are many more across the country. With the pound weak against the euro and the credit crunch biting into family budgets, it is little wonder. Thousands are swapping airport queues, charter airlines and cheap hotels for shorter car journeys, campsites and the less predictable British weather.

The trend has made 2008 the year that sleeping outdoors came back into fashion. Tesco Direct has seen a 38 per cent rise in sales of camping equipment, with similar increases at shops such as Blacks and Millets. At Tiso - the outdoor specialist store - tent sales are up 25 per cent on last year. Sales of chairs, lanterns, roll-mats and sleeping bags are also booming. 'People are realising that the outdoors is free and they are choosing to holiday in the UK,' says Louise Ramsay, the firm's marketing director.

Richard Garland, equipment buyer for Ellis Brigham, which sells mountaineering equipment and outdoor clothing, says momentum has really started to gather over the past two months. He found it 'almost impossible' to book a campsite for his own holiday in the last two weeks of August.

Many of the families at Camber booked their pitches almost a year ago. Karen Pattenden, a community care worker from Sheerness, Kent, took her children, Aidan, 15, and Charlotte, 13, to Malta a couple of years ago, and her spending spiralled out of control. This year a two-week break for two adults and two children has cost just £400. 'We bring all the food we need. There are no hidden costs. My children even bring me back change from the arcade.'

Across the road, Dan O'Hare, an IT analyst from London, sits on the beach as his three children bob up and down on colourful inflatable dinghies and lilos. He bought a villa in Florida two years ago but can't afford to go this year. 'There's seven of us,' he says. 'It has cost us £1,000 for two weeks to come here. Next year we'll save up and go for America.'

Stuart Melcuish, 35, a health and safety trainer from London, has swapped Cornwall for Camber this year to save on fuel costs. He is with his daughter, a friend and her son. The pitch has cost them £200 and they won't spend more than £300 this week. 'You wouldn't get anywhere abroad for that would you?' he asks.

Felicity and Steve Payne had to go to New Romney, 10 minutes' drive from the sea, to find a pitch for their family of four. It might not have the sea views or soft sand of Camber but 'it's just £18 a night - £6 less than the holiday park'.

'You have to book in advance these days,' says George Callow, a 60-year-old retired fireman from Pevensey Bay in East Sussex. 'It never used to be like this.'

Back in Camber, Darren Cole, from Wymondham, Norfolk, bought a caravan for £2,300 a few years ago and says he has already made his money back.

He has made friends with the Pattenden family who set up camp on the other side of his washing line. He has not, however, been impressed by what he calls the 'Range Rover gang'. 'Their expectations are too high,' he says. They left rubbish out by overflowing bins, he adds, and were surprised the following morning when seagulls swooped on the food waste. 'Did they think that someone was going to come and clean it up?'

But the rest of the group are too busy getting merry on Foster's lager and whisky to mind. 'We should all stay in England,' chuckles Sonia Buckingham, whose daughter was hoping to join her but has been told there is no room. 'We used to be able to just phone up the day before,' she says. 'It might not be getting cheaper, but it's certainly getting busier. The tents are getting bigger too.'

Cole wants to extend his stay and commute to work. 'It's an extra two hours, but you don't have to pay for electricity here.'

But not everyone is convinced that camping is the way to holiday on the cheap. Mary Turner, 37, a single mother from Ipswich, Suffolk, here with her daughter Poppy, 15, says that the prices discriminate against a family of two. 'It's more expensive than I thought. I could have brought 25 children and it would be the same.'